What should you do if you anticipate potential conflict of interest

A conflict of interest arises in the workplace when an employee has interests or loyalties that are—or at least potentially could be—at odds with each other.

For example, consider a manager who was promoted from a job where he worked with his wife. The promotion made him his wife's boss, which created a conflict of interest. The company, after discussion with the couple and HR, may decide to transfer her to another department.

A conflict of interest causes an employee to experience a struggle between diverging interests, points of view, or allegiances. Such conflicts are generally forbidden in company codes of conduct or employee handbooks.

Conflicts of interest can cause an employee to act out of interests that are at odds with those of his or her employer or co-workers. In workplaces, employees want to avoid any behavior or choices that could potentially signal a conflict of interest. They are a mark against the employee's reputation, integrity, and trustworthiness in the eyes of management.

It's difficult to define conflicts of interest without concrete examples. The following additional examples will illuminate the range of behaviors and actions that can fall within the definition of conflicts of interest. They are as diverse as the work settings in which they occur and involve employee interaction, actions, and situations in which personal benefits take precedence over what is in the best interests of the employer.

These examples should serve as a guide to behaviors that you want to avoid as a person of integrity in your workplace. It is by no means a comprehensive list.

These are examples of situations in which an employee might experience a conflict of interest.

• An employee reports to a supervisor who is a relative or close friend and has control over their job responsibilities, salary, and promotions.
• A male manager dates a female employee who reports to him or vice versa.
• A lawyer represents a client in a civil dispute while accepting fees from litigants who hold the opposing point of view.
• A purchasing agent hires his brother-in-law to provide vending services to the company lunch areas.
• An employee starts a company that provides similar services to similar clients as those of her full-time employer. This is especially a conflict of interest if her employer has had her sign a non-compete agreement.
• An employee who is a member of a company employee selection team fails to disclose that he is related to a job candidate whom the company team is considering for a position.
• A manager provides paid consulting services on the weekend to a company customer or supplier.
• An employee works part-time in the evening for a company that makes a product that competes with the products of his full-time employer.
• A member of the company board of directors accepts fees and provides advice to a company that is in direct competition with the company on whose board of directors he sits.
• An HR director decides to investigate a formal charge of sexual harassment, using internal resources that she controls, against a fellow corporate executive whom she has known and worked with professionally for years. This would not constitute a conflict of interest if she hired an external employment law firm to conduct the investigation and recommend disciplinary measures.
• A purchasing agent accepts trips and gifts from a vendor and then selects the vendor's products for purchase by the company.
• An employee accepts free gifts and free products from a training and development company and then recommends the purchase of these products without comparing them to comparable products from other vendors.
• A CFO negotiates an agreement on his employer's behalf for a stock option plan from which he will directly benefit.
• A trainer is paid to provide training classes that teach customers how to use the company's software products. He puts up a website that offers his same training on the products as a for-profit enterprise in his spare time. Why would he ever again direct customers in need of training to his company's classes?
• The manager of a marketing department dated a co-worker who is also a manager in the same department. They part ways over time, but when he is promoted to the marketing department director role, she finds herself reporting to him. The existence of the former relationship creates a potential conflict of interest, especially in the eyes of coworkers. The company is forced to change the reporting chain of the department she managed even though the manager and director are no longer dating.
• An employee sets up a personal website on which he sells his employer's software products.

There are many more examples that could be explored, but the general idea here is clear. All of these examples describe a scenario in which an employee is torn between serving more than one person's or organization's best interests. If you're unsure whether there is a conflict of interest, look to see whether there are any competing loyalties.

Understanding Conflict of Interest

Conflict of interest is a common issue in the workplace. Most of us have heard someone say, “It’s who you know, not what you know.” We have heard co-workers complain that a manager’s relative always gets the biggest raise or the best assignment. We might have seen colleagues accept gifts from potential vendors. Maybe a co-worker leaves work 20 minutes early every day so she can get to her second job. A supervisor may give a co-worker time off from work to do volunteer work or might allow employees to solicit donations and funds in the workplace, whether for the Girl Scouts or a local school function. Even though these situations are very different, they all fall under the heading of “conflict of interest.”

What is a Conflict of Interest?

A conflict of interest occurs when an individual’s personal interests – family, friendships, financial, or social factors – could compromise his or her judgment, decisions, or actions in the workplace. Government agencies take conflicts of interest so seriously that they are regulated. Industry organizations, corporations, and universities, including our university, follow that lead by including conflicts of interest in our policies, regulations, and standards of operating procedures. For our university, we must follow Florida’s Code of Ethics for Public Officers and Employees that includes standards of conduct and reporting requirements.

Conflicts of interest are a clash that most often occurs between requirements and interests. Various types of conflicts of interest can occur because of the nature of relationships versus rules of organizations or federal and state laws. People can easily become biased (have an unfair preference) because of small things like friendship, food, or flattery, or they may be influenced to make a decision because of the potential to gain power, prestige, or money. Conflicts can occur when an individual makes or influences a decision and does so for some personal gain that may be unfair, unethical, or even illegal. The important part is what you do in each of those situations. Do you allow your family, friendship, financial, or inside knowledge affect your actions? If you do, you could be violating state statute and university policy.

In our work lives, we also have interests that could influence the way we do our jobs and the decisions we make. Even if we never act on them, there may be an appearance that a conflict of interest has influenced our decisions. Consider this example. Your supervisor is promoted to department director. His daughter-in-law is hired as a new supervisor within the college but is not reporting to him. Maybe the new supervisor is the best candidate for that position, and maybe the new department director had nothing to do with her hire. Even if this hire met all of the requirements under our Employment of Relatives policy, the situation appears suspicious and employees may think that something was unfair or unethical about her hire.

Transparency (being completely open and frank) becomes important when dealing with both actual and potentially perceived conflicts of interest. Perception happens when an individual observes something (behavior or activity) and comes to a conclusion. Perceiving a conflict of interest does not make it a conflict of interest. The true test of verifying whether a matter is just a potentially perceived conflict of interest, or an actual conflict of interest, is disclosure.

When it comes to conflicts of interest, appearance is as important as reality. This is why disclosing conflicts of interest is important. Disclosure is typically a more formal and documented process that most organizations have adopted in policy to address conflicts of interest. The disclosure process is intended to help the work force be transparent and accountable for (explain or justify) their actions and decisions. Disclosure of a potential conflict of interest does not make it an actual conflict, but may help eliminate the perception. On the other hand, disclosure of an actual conflict of interest does not remove the conflict, but helps get it in the open to be properly addressed. It’s important to disclose both potentially perceived and actual conflicts of interest to allow others to evaluate the matter and make the decision, rather than keep it to oneself and then create an ethical or legal situation. The individual cannot make the determination as to whether it is a conflict or not because he or she does not have an independent or objective point of view.

When you identify a situation that may be a conflict, or could be perceived as a conflict, notify your supervisor or University Compliance, Ethics, and Risk at . They can help advise you on how to either remove the conflict by recusing yourself from the situation altogether, or develop a management plan to manage the conflict.

Final Point to Consider

“When in doubt, ask” is an old saying that makes a great deal of sense when working through conflicts of interest. There is no harm in asking, but there could be a great deal of harm to an individual, the organization, or both, by not asking. It is always best to be transparent and accountable to ensure we eliminate either the perceived or actual conflict of interest.